This is a guest post by Brendan Binchy of ROCG, who spoke on corporate structure and strategy at two recent EI events. Here , Brendan talks about the impact of the recent Irish budget will have on the structure of your business.
The last budget heralded in a new business environment that will evolve and crystallise over the next few years. Like most significant change events many will only become aware of the changes when their own enterprise is impacted (or even compromised!) in some way by what has become a new or different business norm.
In my view a real point of strategic inflection occurred when the gap between personal taxes and corporate taxes widened, in that budget, to such a significant extent that when married to the more punitive restrictions imposed on corporate cash extraction through pension funding, it has heralded in an era where the incorporated entity has become ‘king’. Putting the low corporate taxation rate to one side, the Ireland of the past was dominated by tax breaks and reliefs which were largely focused on benefitting the individual rather than the incorporated entities right across the continuum that ranged from pensions to property reliefs.
In a period when credit was freely available this often meant that many investments and arrangement were made personally by individuals but were interwoven in some way with the incorporated business. Just fine when the economy and business is booming but not so good when both constrict – many a corporate nest is now looking for some of the golden eggs to be returned to the laying hen only to find they are too tarnished to be of any use!
So how will the new era of Corporate emphasis manifest ? Well watch out for some of the following indicators: